This post is a copy of my analyst friend Constantinos Papavassilopoulos from IHS Markit. The original copy of this article has been first publish on IHS website.

The outlook for digital terrestrial television in Turkey

Turkey broadcasts its TV signals via the four major platforms (cable, IPTV, satellite and terrestrial). The majority of these broadcasts are digital with the exception of broadcasts made via the terrestrial platform and a dwindling number of analogue cable broadcasts. Turkey is well on track to fully digitize its cable infrastructure. Analogue cable broadcasts represent a quarter of total cable by the end of 2016 and the country is expected to complete the switchover to digital by the end of 2018, according to IHS Markit.

Turkey remains the only European country who has not officially launched a DTT service following Moldova’s launch of its first DTT service in November 2016. Turkey’s DTT delay puts the whole digital transition process in jeopardy, as the country is at risk of missing the final internationally-agreed deadline for switching-off its analogue TV signals, which is 17 June 2020. Missing the deadline may have serious implications for the whole TV industry in Turkey.

Our Analysis

Turkey has made preparations for the introduction of DTT: In 2011 the Turkish parliament passed a new legal framework (Law No 6112/2011), which sets the main legal requirements for DTT service providers. The Law stipulates DTT licence holders must complete the transition to digital two-years after launch. Media regulator RTUK issued the Digital Switchover Plan which outlined a timetable for switching-off analogue signals on a region-by-region basis. The Law foresaw the creation of a single DTT network operator, responsible for rolling-out the DTT network nationwide and managed as a joint company between the public service broadcaster TRT and the major national commercial broadcasters.

The Digital Switchover Plan foresaw the allocation of eight multiplexes to the DTT platform. Six were earmarked for existing national commercial broadcasters, one for public-service broadcaster TRT and one multiplex to carry the channels of regional and local broadcasters.

DTT channel licences were to be allocated via an auction held by RTUK. On April 2013, RTUK awarded 33 DTT national licences, 11 of them in HD and 22 in SD. The auction generated 872 million Turkish Lira ($436 million). However, a year after the auction, the Supreme Court of Turkey suspended the results of the auction and cancelled all DTT licences, citing irregularities with the licensing process.

The cancellation of the DTT licences created huge uncertainty and subsequently the national commercial TV broadcasters expressed reluctance to commit any funds for the DTT network. The reluctance, in a large part, came after the national commercial TV broadcasters signed carriage deals for the delivery of their channels via competing platforms (cable, IPTV and satellite). The commercial broadcasters claim they now have no real incentive to invest in the DTT platform. Furthermore, broadcasters argue Turkey is predominantly fit for satellite and DTT will not be a viable alternative. Satellite (free and pay) penetration of primary TV households reached 79% by the end of 2016, and IHS Markit forecast will remain the dominant platform in Turkey in 2021 (77.2% penetration of primary TV HHs according to IHS Markit).

The IPTV platform is growing in Turkey, attracting half a million new subscribers between 2013 and 2016, which increased its subscriber base from 286,000 to 732,000 respectively. IHS Markit forecasts the IPTV platform will more than double its subscriber base by 2021, increasing to 1.63 million, largely due to the intense competition between Turk Telekom and Turkcell driving new products and promotions in a bid for new customers.

Can Turkey really afford not to develop a DTT platform? The majority of European countries have launched a viable DTT platform. Having said this, countries in the Middle East and North Africa (MENA) region such as Saudi Arabia, UAE and Qatar, have opted for a very limited development of their DTT platform. DTT represents less than 2% of primary TV HHs in many MENA countries. Turkey shares several characteristics with the MENA countries, particularly the dominance of the satellite platform for TV broadcasts.

However,Turkey must auction the UHF frequencies currently occupied by analogue terrestrial broadcasting. The auction will provide the Turkish government with much need revenue. Turkey auctioned the 800 MHz spectrum (the so-called Digital Dividend 1.0 that is the frequencies 790-862 MHz) in August 2015, generating $3.7 billion from the three successful bidders, namely telcos Turk Telekom, Turkcell and Vodafone. Internationally, the International Telecommunications Union (ITU) recommends the 700 MHz spectrum (the Digital Dividend 2.0 or frequencies 694-790 MHz) should be allocated to mobile broadband operators before 2022. For Turkey to successfully auction this spectrum it has to clear it from any analogue or digital terrestrial broadcasting. Therefore, some form of digital transition is needed.

IHS Markit continues to closely follow development of the DTT platform in Turkey via contact with broadcasters and the media regulator RTUK. Apart from some pilot projects in Ankara and Istanbul, the latest developments indicate the process has stalled and the future of the DTT platform in Turkey remains unclear.